PG&E may be required to announce criminal history in ads

San Bruno, Daily city and San Francisaco Fire personal work to contain a fast moving fire caused by an explosion in a San Bruno nighborhood Thursday, Sept. 9, 2010.

Photo: Lance Iversen, The Chronicle

Ever since the deadly San Bruno pipeline explosion in 2010, Pacific Gas and Electric Co. has proclaimed, in public statements and advertisements, its renewed commitment to safe operations — as the company’s website declares, “At PG&E, nothing is more important than safety.”

But the ads may soon include a less-welcome message: the utility’s status as a criminal violator of pipeline-safety laws.

U.S. District Judge Thelton Henderson of San Francisco is scheduled to sentence PG&E on Thursday for six felony convictions handed down by a jury in August. In addition to a fine of $3 million, the maximum allowed by federal law, Henderson said at a hearing Monday that he was inclined to order the company, as a condition of probation, to disclose its criminal record whenever its ads mention safety issues.

“Advertising touting PG&E’s commitment to safety must include the criminal convictions, that it was found liable for knowingly and willfully violating” safety laws, Henderson said, previewing his intended ruling.

U.S. District Court Judge Thelton Henderson is set to sentence PG&E in San Francisco on Thursday, Jan. 26, 2017, for criminal convictions related to pipeline safety violations. (AP Photo/Jeff Chiu)

Photo: Jeff Chiu, Associated Press

He didn’t mention a timetable, but the court’s probation office has recommended regulating PG&E’s ads for a year. The restrictions would take effect immediately unless the company persuaded Henderson or a higher court to postpone them during an appeal.

In court filings, PG&E has argued that an advertising disclosure was unnecessary because the case, including the six-week trial and jury verdict, was widely covered by the media. “No further publicity is required to alert the public to the circumstances of this case,” company lawyers said.

But U.S. sentencing guidelines, authorized by Congress, have held since 1991 that a federal judge can order any “organization” convicted of a crime, as part of probation, “to publicize the nature of the offense committed, the fact of conviction, the nature of the punishment imposed, and the steps that will be taken to prevent the recurrence of similar offenses.”

Another San Francisco federal judge relied on the guidelines in 2012 to order an electronics company convicted of price-fixing to print notices of its conviction and punishment in major trade publications.

“It’s sending a message to the community that this behavior won’t be tolerated,” said Rory Little, a law professor at UC Hastings College of the Law in San Francisco and a former federal prosecutor. While the First Amendment normally prohibits the government from requiring individuals or companies to convey a particular message, Little said, “when you’ve been convicted of a crime, a lot of constitutional protections go out the window.”

Even without a criminal conviction, said Stanford Law Professor Robert Weisberg, courts in the 1990s upheld the Federal Trade Commission’s authority to order “corrective advertising” for companies that were found to have made false statements in their ads.

David Levine, a Hastings professor who specializes in federal litigation, compared court-ordered advertising to “shaming punishments” like a scarlet letter. Courts have upheld them, he said, if they are reasonably connected to “one of the purposes of punishment, such as deterrence or rehabilitation.”

A jury convicted PG&E of flouting federal requirements for monitoring and testing its aging gas pipelines, based on testimony from current and former employees that it knowingly used low-cost inspection methods that could not detect internal flaws in the lines. The jury also convicted the company of obstructing a federal investigation into the San Bruno explosion by concealing its practice of pumping gas through the lines at pressures above legal limits.

The explosion and fire in September 2010 killed eight people, injured 58 and destroyed 38 homes in San Bruno’s Crestmoor neighborhood. The cause was a defective seam weld in a pipeline that PG&E records had listed as seamless.

Prosecutors initially sought a fine of up to $562 million, twice the amount PG&E allegedly should have spent on safety measures, but backed off after Henderson barred much of their evidence of cost-cutting. The state Public Utilities Commission has fined PG&E $1.6 billion for the explosion, and the company settled lawsuits by many of the victims and survivors for $565 million in 2013, followed by additional settlements for undisclosed amounts.

With only a minimal criminal fine available — about 0.3 percent of PG&E’s annual profits — prosecutors have focused on Henderson’s authority to regulate the company’s behavior during five years of probation.

The company has agreed to a court-appointed monitor of its compliance with safety laws, and has not objected to a proposed requirement of 10,000 hours of community service by its employees, including 2,000 hours by top executives.

The most publicly visible aspect of the sentence is likely to be the inclusion of PG&E’s criminal convictions in safety-related advertisements. The content of the ads is up for debate — prosecutors want the ads to spell out the utility’s corrupt intent, while a PG&E lawyer says references to past crimes should be part of an overall message of working together for safety — but the company will ultimately determine the message, subject to court oversight.

“PG&E has got lots of money to massage the message,” said Little, of UC Hastings. It’s all part of a long-running debate, he said, about “how do we sanction corporations for criminal acts? ... No one is quite sure how to make corporations act better.”

Bob Egelko has been a reporter since June 1970. He spent 30 years with the Associated Press, covering news, politics and occasionally sports in Los Angeles, San Diego and Sacramento, and legal affairs in San Francisco from 1984 onward. He worked for the San Francisco Examiner for five months in 2000, then joined The Chronicle in November 2000.

His beat includes state and federal courts in California, the Supreme Court and the State Bar. He has a law degree from McGeorge School of Law in Sacramento and is a member of the bar. Coverage has included the passage of Proposition 13 in 1978, the appointment of Rose Bird to the state Supreme Court and her removal by the voters, the death penalty in California and the battles over gay rights and same-sex marriage.